Massachusetts Law on Home Ownership Effective May 1, 2008

by Thomas V. Bennett

On November 29, 2007, Governor Patrick signed House Bill No. 4387 which has far reaching applications in connection with the origination of a loan, the licensing of mortgage originators, technical requirements for providing information on mortgage brokers and mortgage originators, and provisions dealing with the foreclosure of mortgages.

With respect to 1-4 family properties that are owner/occupied, the Act provides for a new 90-day right to reinstate before a foreclosure action is commenced. That provision of the law shall take effect on May 1, 2008. The statute requires that certain notices be given to the home owner at the time the 90-day notice is given. A suggested form of letter containing that information follows.

In addition, the law requires

• that a copy of the notice required by the Act and an affidavit demonstrating compliance shall be filed by the mortgagee or anyone holding thereunder in any action or proceeding to foreclose on a residential mortgage. A copy of the notice is also required to be filed with the Commissioner of the Division of Banks;
• that if a mortgage is foreclosed, the mortgagee is required to notify the Commissioner of the Division of Banks, in writing, of the date of the foreclosure sale and the purchase price obtained at the sale;
• that the right to cure within 90 days needs to be given only once during a five-year period regardless of the mortgage holder;
• that following a foreclosure sale, the mortgagee is required to provide to the mortgagor an itemized accounting of the disposition of the proceeds arising from the sale including, but not limited to, the sales price, legal fees, auctioneer’s fees, publication costs and other fees and any surplus due to the mortgagor;
• that any mortgage or assignment to be recorded (effective immediately) must contain the name, post office address and license number of the mortgage broker and, if applicable, the mortgage loan originator responsible for placing the mortgage loan.
   

SAMPLE LETTER

(addressee)
Re: Loan No.:
Property Address:
Our File No.

Dear _________________:

The records of the undersigned indicate you are in default under the terms of the Note evidencing the above referenced loan, and the Mortgage, Security Deed, or Deed of Trust (“Mortgage”) securing the Note ("Note") and encumbering the real property located at the property address noted above.

Under the terms of the Note and/or Mortgage you are hereby notified of the following:

1.     You are in default because you have failed to pay the required monthly installments and late charges. As of the date hereof, principal, interest, escrow, late charges, and fees of $<> are due on the loan. After the first of the next month and after the first of each month thereafter, an additional mortgage payment will be due. The total amount due will be required in the form of certified funds.

2.     If there is reason to dispute the debt, or any portion thereof, you must notify us in writing within 30 days of this notice. Otherwise, the undersigned will consider the debt validated.

3.     Your failure to cure the default within 90 days from the date of this notice will result in the entire balance becoming due and payable under the terms of the Note and Mortgage which will allow the mortgagee, or anyone holding thereunder, to take steps to terminate your ownership in your property by a foreclosure proceeding or other action to seize your home.

4.     You have the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default, or any other defense to acceleration and sale.

5.     The name of the current or former mortgage broker or mortgage
loan originator for your mortgage is: [unknown].

6.     You may be eligible for assistance from the Massachusetts Housing Finance Agency and the Division of Banks in order to cure the default. You may contact the Home Ownership Preservation Foundation at 1-888-995-HOPE (4673) for an initial screening to determine whether or not you are eligible for referral to a home saver counseling agency. For information about a home saver loan program, please visit www.masshousing.com.

7.     Emergency homeowner counseling is available. To receive a list of HUD approved counseling agencies in your area, please call 1-800-569-4287. While the loan remains in default, the undersigned will perform certain tasks to protect its interest in the property. One of the tasks that the undersigned will perform at regular intervals during the default is to visit your property. This will be done to determine, as of the date of inspection, the property condition, occupancy status, and possibly your plans for curing the default and paying this loan on time. You can anticipate that any costs incurred by the undersigned will be added to the amount you now owe.

8.     The name and address of the mortgagee and its servicer and the telephone number of the representative of the mortgagee who you may contact if you disagree with the assertion that a default has occurred or the correctness of the calculation of the amount required to cure the default is as follows:

Mortgagee/Servicer:
Address:
Telephone No.
Person to Contact:

9.     Please remit Payment to:
Attention: _______________________
Local Telephone No. __________________________
Toll Free Telephone No. ___________________________

THE UNDERSIGNED IS ATTEMPTING TO COLLECT A DEBT AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.

Very truly yours,
 

___________________________
 

cc Commissioner of Massachusetts Division of Banks
One South Station, Boston, MA 02110

 

If you have questions regarding this or any other legal real estate matter, please contact Thomas V. Bennett attvb@barronstad.com or (617) 531-6574.

Read more about real estate law - Thomas V. Bennett's weekly column "Open House" in The Boston Courant.